The Department for Work and Pensions (DWP) has initiated a six-week review of Carer's Allowance that could fundamentally alter the benefit for hundreds of thousands of unpaid carers across England and Wales. The call for evidence, which opened on July 7, 2026, marks the first major assessment of the benefit since its introduction in 1976.
Among the key proposals under consideration is replacing the current earnings 'cliff edge' with a taper system. Currently, carers can earn up to £204 per week after certain deductions while retaining their full allowance. Earning even £1 above this threshold results in a complete loss of entitlement. The new taper would gradually reduce the benefit as earnings rise, rather than cutting it off entirely.
Modernising for Modern Working Patterns
The DWP acknowledges that the existing system fails to reflect contemporary employment realities, particularly for carers with fluctuating weekly incomes. This rigidity has led to unexpected overpayments and debt accumulation. The review follows the independent Sayce Review, which concluded that the earnings rules were outdated and that unclear guidance on variable income contributed to carers unintentionally building up debts.
Minister for Social Security and Disability Sir Stephen Timms stated: "Unpaid carers are the backbone of our communities - quietly providing support that makes an enormous difference to the lives of those they love. They deserve a system and level of support that properly reflects the contribution they make, and we are determined to deliver that. This call for evidence is our commitment to going further - and to making sure carers' voices shape every step of what comes next."
Current Earnings Limit and Overpayment Crisis
The weekly earnings limit was increased to a record £204 earlier in 2026, allowing carers to earn approximately £10,000 annually while claiming Carer's Allowance. However, the DWP is now reassessing around 200,000 Carer's Allowance cases following widespread overpayment issues. Approximately 25,000 carers are expected to have their debts reduced, cancelled, or refunded as a result of this exercise.
From next week, new regulations will ensure that any refunds issued to carers do not affect their entitlement to Universal Credit, Pension Credit, or Housing Benefit.
Stakeholder Reactions
Emily Holzhausen CBE, Director of Policy and Public Affairs at Carers UK, welcomed the review: "We need to see further reform to Carer's Allowance because the current system is outdated and no longer reflects the realities of caring today. This includes inflexible rules around the earnings limit which are hard to navigate for carers with fluctuating earnings and can dissuade some from claiming what they are entitled to altogether."
Kirsty McHugh, chief executive of Carers Trust, described the review as "incredibly encouraging" and expressed hope that it would become "a real step change in the way carers are supported."
Scope and Timeline
The call for evidence, open until August 18, 2026, seeks input from carers, charities, and organisations across the UK. However, any resulting reforms will apply only to Carer's Allowance in England and Wales. Northern Ireland operates a similar system through the Department for Communities. In Scotland, Carer's Allowance has been replaced by Carer Support Payment, administered by Social Security Scotland.
The DWP is also considering adjustments to rules around working hours to better accommodate modern caring responsibilities. Responses to the consultation will inform future legislation and policy changes aimed at modernising the benefit for the first time in five decades.
